It was difficult not to come away thinking this was the moment when it all unravelled for Manchester City. It had been a spirited and desperate comeback, very nearly a glorious one, but they could not concoct a final, dramatic winner and the simple fact is a 3-3 draw against Sunderland is not enough. City have picked a bad time to go through their first sustained loss of form and the consequences threaten to be serious.

The deterioration set in a while ago but when the story comes to be told of the 2011-12 season City might reflect on the day their immaculate home record crumpled and it needed two late goals to salvage the single point. Roberto Mancini's team looked tired, grumpy and short of ideas and it was easy to imagine Sir Alex Ferguson's rubicund glow when the news reached him on Manchester United's golfing break at St Andrews. It was on the fairway that he heard the news of his first-ever Premier League title in 1993, and now maybe his 13th.

Mancini had made it clear beforehand that his team needed to win all their remaining games and, from here, they may have to reinvent themselves if the damage is not going to be irreparable. Even then, it may not be enough.

For the first time United are in a position, two points clear with a game in hand, whereby they can lose the derby on 30 April and still be certain of claiming the title if they win their other games.

It is all in their hands and when Mancini talked about fancying fourth-from-bottom Blackburn to get a draw against United on Monday – "I don't know why, I just do, why not?" – it cannot be said he sounded terribly convincing. In fact, it was difficult to recall the last time he looked so down. "It's going to be hard," he said. "It depends on Monday and, after that, we have seven games. We are still in the title race because eight games is enough for United to do two draws. But we needed to win this match and we didn't have a good performance."

There was unmistakable sadness in his voice, but anger too. Mario Balotelli may have scored twice but, once again, he was left to graze in the scapegoat's paddock. Mancini had contemplated substituting him "after five minutes" but decided against it on the basis he had only one striker, the not fully-fit Carlos Tevez, on the bench. "If we had Sergio Agüero we would have won," City's manager said, eyes smouldering. "Mario didn't play well. In a game like this, the strikers need to be the difference – not just in the last two or three minutes."

Agüero had been missing, Mancini confirmed, after suffering burns from a pain-killing spray while treating a foot injury he had picked up against Chelsea. "It was not his fault," Mancini emphasised, which left the distinct impression his annoyance lies with the club's medical staff.

Whatever the truth, the fact is Balotelli and Edin Dzeko have started only four games together this season, and City have not won any. Seldom have they looked so dishevelled, so frequently disorganised and vulnerable. David Silva, brilliant throughout the first two-thirds of the season, lasted only 58 minutes and, frankly, looked worn out. James Milner was nutmegged by James McClean inside the first 10 minutes and his afternoon got even worse. He was partly to blame for Sunderland's first two goals and, after the second, became embroiled in an angry exchange with Mancini. When he was substituted in the second half, manager and player studiously ignored one another.

The lingering memory, however, will be that moment, at 3-1, when City had a free-kick within shooting distance. Balotelli was there first and took the ball from Nigel de Jong. Aleksandar Kolarov came over as the designated free-kick specialist, except Balotelli did not want to hand it over. So Kolarov waited for Balotelli to put the ball down before picking it up and taking control. Balotelli tried to grab it back. There was jostling. Eventually, Vincent Kompany and De Jong told Balotelli to clear off. It was playground stuff. More than anything, it was the kind of scene that simply would not occur with Ferguson's players. Mancini shook his head afterwards. "It can happen. But this is the last time," he said.

For the first time there were audible boos for Balotelli, a player normally given almost unconditional support from City's crowd. With Agüero missing, City really needed someone who is capable of serious, grown-up football.

Instead they got the stroppy teenager routine. These are the moments when Mancini must wonder if he is deluding himself thinking that Balotelli may one day be in the same bracket as Lionel Messi and Cristiano Ronaldo.

Increasingly this season, there have been indications his faith in the player is wearing thin. When Balotelli scored to make it 3-2 Mancini did not even leave his seat. He simply sat there, shaking his head.

The pity for Sunderland is that so much focus is on the title race they may not get the praise they deserve. It should not be lost how well they played. Martin O'Neill's restoration work with Nicklas Bendtner alone is worthy of considerable assessment. "I thought he played like a proper centre-forward," the manager said. "When he plays like that, he justifies his own self-vaunted opinion."

Stéphane Sessègnon, Craig Gardner and Sebastian Larsson all pushed Bendtner close as the game's outstanding player. Lee Cattermole was excellent, too. O'Neill felt his team had been "brilliant" and deserved to win. "We have some really disappointed players in the dressing room."

Mancini, in stark contrast, used words such as "crazy" and "flat" and "strange". The City manager waited to remonstrate with the referee, Phil Dowd, at the final whistle, convinced that more stoppage time should have been played, but it was City who benefited from the most contentious decision, when Dzeko ran into Craig Gardner and won a soft penalty.

"My initial reaction was that he was going to book their player," O'Neill reflected. "I should have known better."

He looked almost as aggrieved as Mancini, though not quite. Manchester United's next four games are all against bottom-six teams followed by a visit from Everton, who have not won at Old Trafford since 1992.

City have been brilliant at times this season, smashing records, winning admirers and, lest it be forgotten, beating United 6-1. Now, they may just have blown it.